[TusharK]

Mercedes-Benz plans to expand its production capacity at its Pune plant as luxury car sales hit record highs in the country.



According to media reports, Mercedes-Benz is looking to double its plant capacity from 20,000 units to 40,000 units per annum. It will be the first major expansion by a luxury carmaker in India.

Santosh Iyer, MD & CEO of Mercedes-Benz India stated that the company has started the process to identify and look at future expansion needs as sales move towards its peak capacity. “While we are fully focused on 2024 right now, we will need to expand if the existing growth rates continue,” he added.

Mercedes-Benz India closed the year with record sales. The carmaker registered its highest-ever sales of 17,408 units in CY2023, a 10% growth over the previous year.

Mercedes plans to invest Rs 200 crore to scale up its manufacturing operations at the Chakan plant in 2024.

Source: TOI

Link to Team-BHP News

[Acharya]

At the current Price points across the range, Merc would find it real hard to sell 40k vehicles a year, even in 2026-27.
Hopefully, additional capacity will bring in much needed sense in pricing.

[AamodB]

Originally Posted by Acharya

At the current Price points across the range, Merc would find it real hard to sell 40k vehicles a year, even in 2026-27.
Hopefully, additional capacity will bring in much needed sense in pricing.

MBIL products are expensive yes, but there's clearly people willing to buy, and buying the cars more than ever before. A 10% YoY growth in sales is nothing to be sniggered at especially in the luxury segment.

For a plant with a capacity of 20k, 17.5k is the correct point to make a decision and future proof. It reflects well on their intentions of investing in their India operations while several other carmakers (in the more affordable segment) are on the verge of or have already wrapped up.

A plant expansion is will of course take a couple of years to be operational and if the current trend continues, in less than 10 years, MBIL would already be at peak capacity again.

[Shreyans_Jain]

Mercedes does have a lot of brand pull for us millennials and people who are older. Growing up, Merc was THE brand. This was the car that was the ultimate proof that you had truly succeeded in life. However, I am not sure if the younger ones see it that way. Between ever increasing prices, worsening powertrain options and fast changing market dynamics and technologies, things are not so simple. If I think about it, the only reason I would pick a C or a GLC today would be to fulfill that childhood dream. Otherwise, products like the Volvo C40 make more sense in every possible way.

[Acharya]

Originally Posted by AamodB

A 10% YoY growth in sales is nothing to be sniggered at especially in the luxury segment.

Certainly no disrespect for 10% growth, the underlying tone is about what it could have been. I’m no economic expert but I see potential for much higher growth for products which are priced for the value they offer, even in luxury segments.
Imagine GLC for 60-65 OTR, it would be flying off the shelves.

Moreover, it’s not just the taxes, car makers have adopted the strategy to go for max profits, which is certainly curtailing the growth potential.

[AamodB]

Originally Posted by Shreyans_Jain

Mercedes does have a lot of brand pull for us millennials and people who are older. Growing up, Merc was THE brand. However, I am not sure if the younger ones see it that way. Otherwise, products like the Volvo C40 make more sense in every possible way.

I do agree with your point of Mercedes being perceived as a more "distinguished gentleman" brand rather than one for the younger generation with BMW and Land Rover seemingly the pick of the bunch.

I do think for the younger affluent population, LR and more relevant to your point Volvo have a ways to go in improving their overall perception to be seen rubbing shoulders with Mercedes and BMW.

Personally LR still equals unreliability/ a gamble and Volvo isn't on the same brand image playing field (which is essentially the name of the game) as the German trio + JLR.

Originally Posted by Acharya

Imagine GLC for 60-65 OTR, it would be flying off the shelves.

Potentially yes. But in my very uninformed opinion, MBIL would rather have themselves remain atop the perch and avoid an Audi situation during the early-mid 2010s with super sales and hundreds of cars on the road but then no bandwidth to manage growth.

I do wonder if the high costs are a combination of brand positioning along with keeping the demand in check for the limited capacity. Possibly even to fund their nascent EV setup.

Like you'd mentioned earlier, while prices won't be slashed, added capacity might curtail the YoY price bumps that we're so used to seeing in all cars. Only time will tell I guess.

[Jeroen]

I doubt very much MB is expanding in order to lower prices. Seems, for whatever reason, their cars are in high demand.

Cars that are sold are never too expensive. Somebody was willing to pay that price.

There is a lot to be said for running relatively high margin with low volumes.

Of course, there is the brand image to consider. Butthe financials are working out for MB, undoubtedly.


Jeroen